India's Inflation Accelerates In December

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India's Inflation Accelerates In December

Retail inflation crossed the RBI's comfort level and rose to 5.21 per cent in December on rise in prices of food items, egg and vegetables, dashing hopes of interest rate cut in the near future.

The core inflation, which excludes volatile food and energy prices, increased 0.3 percent in December, its largest increase since January 2017, said the Labor Department on Friday.

The data were unlikely to have much influence on interest rate expectations, however, as the Federal Reserve prefers to take its measure of price pressures from personal consumption expenditure (PCE) data, published later in the month.

Data from the Central Statistics Office (CSO) showed December's consumer price index (CPI) inflation rose to 5.21 per cent, from 4.88 per cent in November.

Most of the pressure here in December's inflation was tied to housing and medical costs. The Commerce Department previously said they had increased 0.8 per cent in November.

"It supports our view that the Fed will ultimately increase interest rates by a more aggressive 100 basis points cumulatively this year", said Paul Ashworth, chief USA economist at Capital Economics in Toronto. That lowered the year-on-year increase in the CPI to 2.1% from 2.2% in November.

For December, energy prices fell 1.2 percent after surging 3.9 percent in November.

Retail sales rose 0.4% in Decembe (http://www.marketwatch.com/story/holiday-retail-sales-a-case-of-haves-havenots-2018-01-12) r on a brisk holiday shopping season, but slightly below the MarketWatch forecast of 0.5%. The US central bank hiked borrowing costs three times in 2017.

While oil prices have accelerated in January, it may stand out that the December monthly energy prices as a whole were down 1.2% - but gasoline was down 2.7% in December.

After coming in below the Fed's target for years, United States inflation appears to have rebounded in the US.

But clothing prices fell for the fourth consecutive month, and airline fares fell 0.5% after a 2.4% drop in November. In the same month previous year, growth was 1.5 percent.

However, the mining sector production growth slowed to 1.1% from 8.1% a year ago.

The for final demand slipped 0.1 percent last month.

Strong growth in manufacturing helped push up industrial growth in November. Consumer spending, which accounts for more than two-thirds of United States economic activity, increased at a 2.2 per cent annualised rate in the third quarter. The economy grew at a 3.2 percent pace during that period.

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